Internal Control for Outflows: Cash Disbursements and Investments Essay

Cash Disbursements Budgeting and SupervisionThe first step towards any task activity is planning and budgeting. The expenditure that is likely to be incurred for each activity or each part must(prenominal) be estimated and included in a budget for that activity/department. Not only the add but also the type of expenditure that is applicable to the activity ought to be defined. Once the budget has been speculate and approved by the Board, it must be ensured that the disbursements atomic number 18 used only for those purposes that are defined in the budget. Any expenses outside the budget must require special approval. Proper AuthorizationThe person or persons that are entitled to make authorizations for cash disbursements must be determined beforehand, clearly and unambiguously. It will be wise if one individual from the organization, largely the executive director, or the head of each department possesses this right. new(prenominal) than these people, no other person should b e bothowed to sanction cash disbursements. requisition of DutiesDifferent persons must be responsible for different duties related to cash disbursements. For instance, there should be a different person authorizing the payments, some other one signing the check and another person making the entry in the books of accounts. This will lower chances of fraud. Two Signatories for Larger ChecksIf the check is for an amount larger than a stipulated one, it should require the signature of two persons, who play at a higher level in the organization. Documentation and AccountingBills or receipts financial support each cash disbursement must be present. The cash disbursement must be the right way entered in the books of accounts by the book keeper or cash manager. Periodical Internal AuditAn indwelling audit must be conducted periodically to ensure that all accounts relating to cash are accurate, in ossification with the policies and there are no other discrepancies.Investments Invest ment PolicyThe organization should have a fit enthronement policy containing details of the type and quantum of investments it would like to make during a specified period of time, generally a year. Further the policy should also provide particulars as to the financial instruments/products and financial institutions approved for investment purposes. Transfer of MoneyThe money involved in the sale and/or procure of investments must be monitored. Wire transfers should be regulated with an appropriate set of regulations and security measures. Banks should be make aware of these regulations and should be required to provide written notifications of wire transfers as well as other investment transactions. Segregation of DutiesThe persons responsible for approving investments, signing the checks, signing the receipts, supervising the process of investment and documenting the investment must all be different. Recording and DocumentationThe sanction provided, the process followed and oth er information in relation to the purchase and/or sale of investments should be accurately recorded and documented by the investment manager. Periodical StatementsReports and statements must be compiled from time to time, preferably annually containing details about the total investments of the organization, the various forms of investments, their market value, engagement rates, maturity dates and other important particulars, if any. Periodical Internal AuditAn internal audit must be conducted periodically to ensure that all accounts relating to investments are accurate, in compliance with the investment policy and there are no other discrepancies.